421A Tax Break could mean more development for Brooklyn and Queens Real Estate.
Gov. Andrew Cuomo has brokered an agreement between the city's real estate lobby and the building trades union to revive 421-a, a controversial property tax break for developers that the city and many in the industry believe is essential for the construction of rental housing.
"The deal reached today between these parties provides more affordability for tenants and fairer wages for workers than under the original proposal,” said Cuomo. "While I would prefer even more affordability in the 421-a program, this agreement marks a major step forward for New Yorkers."
The deal was reached between the 100,000 member Building and Construction Trades Council of Greater New York and the Real Estate Board of New York. Key to the agreement is a wage floor for certain construction projects. The revamped program would require average wages of $60 an hour including benefits for construction workers on Manhattan projects containing 300 or more rental units. The average wage for similar sized projects along waterfront Brooklyn and Queens communities would be $45 an hour.
"We applaud Gov. Andrew Cuomo and his administration for bringing all parties together to finalize an agreement on an important public policy that will allow for the development of critical affordable housing, and establishes wage standards for construction workers in New York," said Gary LaBarbera, president of the Building and Construction Trades Council.
Cuomo had previously signed a 2015 law that extended the tax break and increased the amount of affordable housing that would be required in exchange for receiving it. But he held off putting it into place until developers and the construction trades union agreed on how much laborers would be paid at sites getting the tax break. The two sides were originally supposed to reach a pact by January, but negotiations stalled and dragged on until Thursday’s announcement.
"We are pleased to have reached an agreement that will permit the production of new rental housing in New York City, including a substantial share of affordable units, while also ensuring good wages for construction workers,” said Rob Speyer, president and CEO of Tishman Speyer and chair of REBNY. "We would like to thank Governor Cuomo for his leadership on this critical issue."
The plan would grant property tax relief to an entire building for 35 years, whereas the benefit in the 2015 law only lasted for 25 years for the market-rate apartments of a project. Income restrictions on affordable apartments, meanwhile, would be extended to 40 years, and developers would be required to set aside the units for lower-income New Yorkers, though the governor’s office declined to provide specifics. These changes mean the agreement must be approved by the state Senate and Assembly. Affordable housing advocates hope that the agreement clears the path for legislators to sign off on other initiatives that have been held up because of the impasse, including $2 billion in statewide affordable housing funds.
"We urge state officials to quickly take this next step, which would so greatly benefit families and our economy,” said Jolie Milstein, president of the New York State Association for Affordable Housing, an affordable housing trade group.
If passed by the legislature, the deal brokered by the governor could help the de Blasio administration stay on track to reach its goal of building 80,000 units of affordable housing.